Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
In response to the spread of the 2019 Novel Coronavirus (COVID-19), President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law on March 27, 2020. The CARES Act is the third phase in Congress’ response to COVID-19 following the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 and the Families First Coronavirus Response Act (FFCRA). The roughly $2 trillion CARES Act provides emergency relief aimed to assist business, individuals, and hospitals during the period of public health emergency due to COVID-19. The CARES Act provides various benefits to individuals such as cash payments and increased unemployment benefits, as well as funding for various state and federal programs. This Advisor focuses on the CARES Act’s material amendments to the FFCRA and the CARES Act’s benefits provisions.
Emergency and Family Medical Leave Act (EFMLA) The CARES Act amends the EFMLA leave portion of the FFCRA to include a limitation on the amount that employers are required to pay to employees during emergency leave taken due to the employee’s need to care for their minor child on account of 1) closure of their child’s school or child care center, or 2) their child care provider’s unavailability, in either case due to an emergency declaration by federal, state, or local authorities related to COVID-19. The CARES Act clarifies that an employer will not be required to pay more than $200 per day and $10,000 in the aggregate for each employee taking paid EFMLA leave. After 10 days, the emergency leave becomes paid leave. The total leave can extend for up to 12 weeks. Employees are required to be paid at a rate equal to at least two-thirds of their regular rate of pay as determined under the Fair Labor Standards Act (FLSA), after the first 10 days of EFMLA leave. The CARES Act also clarifies that an employee will be treated as employed for 30 days, and therefore eligible for leave under the FFCRA’s emergency leave provisions, under the following circumstances:
- The employee was laid off by the employer no earlier than March 1, 2020.
- The employee had worked for the employer for not less than 30 of the last 60 calendar days prior to the layoff.
- The employee was rehired by the employer.
Emergency Paid Sick Leave Act (EPSLA) The CARES Act also amended the EPSLA leave portion of the FFCRA, which entitles full-time and part-time employees to 80 hours of paid sick leave, in order to limit the amount that an employer is required to pay. The limitation is $511 per day and no more than $5,110 in the aggregate when the EPSLA is for one of the following reasons: 1. The employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19. 2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19. 3. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis. The CARES Act amended the EPSLA to limit the amount that an employer is required to pay to an employee on leave for one of the following reasons to $200 per day and no more than $2,000 in the aggregate:
- The employee is caring for an individual who is subject to an order as described in number 1 above or has been advised as described in number 2 above.
- The employee is caring for his or her son or daughter if the school or place of care of the son or daughter has been closed, or the childcare provider of the son or daughter is unavailable, due to COVID-19 precautions.
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.
Employer Tax Credits for Compensation and Benefits The CARES Act amends the FFCRA by providing that the tax credits for compensation paid and health benefits maintained by the employer during leave periods under the FFCRA may be advanced according to forms and instructions provided by the IRS. We intend to provide additional information regarding the employer tax credits in a subsequent Advisor.
DOL Temporary Non-Enforcement of FFCRA Violations In the Department of Labor (DOL) Field Bulletin No. 2020-1, issued on March 24, 2020, the DOL stated that it will not bring enforcement actions against any public or private employer for violations of the FFCRA occurring within 30 days of the Act’s enactment, which is March 18, 2020, through April 17, 2020. For purposes of non-enforcement of violations, the employer must be acting “reasonably” and “in good faith” when the violations occurred and the following facts must be present:
The employer remedies any violations, including by making all employees whole as soon as possible.
- The violations are not willful (the employer either knew or showed reckless disregard for the matter of whether the employer’s conduct was prohibited).
- The DOL receives a written commitment from the employer to comply with the FFCRA in the future.
In addition to the DOL’s temporary non-enforcement policy for FFCRA violations, the agency has been empowered to delay certain reporting and disclosure deadlines under the Employee Retirement Income Security Act of 1974.
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